World Bank Employment Policy Primer

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The World Bank Employment Policy Primer aims to provide a comprehensive, up-to-date resource on labor market policy issues. These short notes are concise summaries of best practice on various topics.

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Active Labor Market Programs for Youth : A Framework to Guide Youth Employment Interventions

2010-11, Cunningham, Wendy, Wuermli, Alice

Youth are three times more likely to be unemployed than adults, even in economies with strong economic growth. This note is a tool to provide policymakers and youth-serving organizations with a framework to better diagnose short- to medium-run constraints facing the stock of unemployed youth and to design evidence based youth employment interventions. The note only addresses youth employment; strategies to affect wages, productivity, underemployment, or job quality are not directly discussed. This note presents youth-oriented Active Labor Market Programs (ALMPs) that conform to one of two criteria. Each intervention either has been shown to have predominately positive impact, as measured by rigorous impact evaluations, or has weaker evidence of impact-rigorous evaluations with mixed evidence of impact or strong positive monitoring data-and is theoretically sound. Cost-effectiveness information is presented when available. The note focuses on programs that are appropriate to address constraints faced by youth from disadvantaged backgrounds.

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A Practicioner's Guide to Evaluating the Impacts of Labor Market Programs

2009-12, Fitzsimons, Emla, Vera-Hernandez, Marcos

This note provides an introduction to the impact evaluation of labor market programs, with particular reference to developing countries. Its focus is on the main issues that need to be considered when planning an impact evaluation, including the importance of rigorous design for an evaluation, and on the statistical techniques used to estimate program impacts. To help the exposition, a prototype of a training program is referred to intermittently throughout the note. This hypothetical training program, which authors call get-to-work, provides training to the unemployed to help them find work. The note describes some general issues that are important for any impact evaluation of employment programs, both in the design and analysis stages, regardless of the specific evaluation techniques used. It then describes the main evaluation techniques, including the data requirements and the main assumptions invoked by each.

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Unemployment Insurance Simulation Model (UISIM)

2008-12, Fares, Jean, Vodopivec, Milan

This note describes the key features of the Unemployment Insurance Simulation Model (UISIM) - how the model is structured, what data inputs are needed, and what outputs the model generates (the model comes with user's and technical manuals, which provide detailed information about how to operate the model and how it calculates the outputs). For illustrative purposes, the note also presents an example where the model is used to generate simulations for a countrywide unemployment insurance (UI) system. The appendix to the note describes typical data sources and provides a detailed description of requisite data.

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Unemployment Insurance: Efficiency Effects and Lessons for Developing Countries

2004-04, Vodopivec, Milan

Unemployment insurance (UI) is the most common public income support program for the unemployed in developed countries.1 In these countries, it typically offers good protection: it covers the majority of employed persons, irrespective of occupation or industry, and provides adequate smoothening of consumption patterns. For example, studies on the U.S. find that the welfare of benefit recipient households is on average only 3-8 percent lower than the welfare of otherwise identical households, and that in the absence of unemployment insurance, average consumption expenditures would fall by about 20 percent. In the last decade, UI programs have been introduced in transition countries, and their use in developing countries is on the rise as well.

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The Impact of Non-Wage Benefits on Job Quality and Labor Market Outcomes in the Developing World : What Do We Know?

2009-12, Helppie, Brooke, Macis, Mario

One indicator of job quality in the developing world is the extent to which workers are covered by nonwage mandated benefits. Mandated benefits are a class of labor market regulation that requires employers to provide their workers with some form of non-wage pay or benefits. These benefits are typically fully financed by the employer or the employer-worker pair, and administered at the firm level. This note summarizes the existing knowledge and research on the effects of providing higher mandated benefits on labor market outcomes. In particular, the authors focus on the evidence available for developing economies. The authors discuss the potential advantages and drawbacks of providing mandated benefits (as implied by economic theory), summarize some of the existing empirical literature on the impact of mandated benefits. This note sets out to introduce some of the theory and existing literature about mandated benefits, and to draw attention to the need for more research about the impact of this type of policy.

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Addressing the Employment Effects of the Financial Crisis : The Role of Wage Subsidies and Reduced Work Schedules

2009-09, Robalino, David, Banerji, Arup

This note briefly reviews the experiences with wage subsidies and reduced work schedules in promoting employment and avoiding the depreciation of accumulated skills and knowledge due to a temporary downturn. These policies have been adopted by many high income countries as well as some middle income countries. It is to early o comment on their impact; to date, they have not been rigorously evaluated in the context of the financial crisis. And any results will also be difficult to generalize, since much depends on local conditions and the structure of the labor market. Wage subsidies and reduced work schedules show some promise as measures that can help countries to increase the employment elasticity of growth during the recovery and avoid the depreciation of skills associated with unemployment or informal work. Wage subsidies and reduced work schedules mainly benefit formal sector workers, which represent less than 50 percent of the labor force in most middle and low income countries.

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The Effects of Globalization on Working Conditions in Developing Countries : An Analysis Framework and Country Study Results

2008-03, Jayasuriya, Ruwan

Globalization defined as falling barriers to, and the increase in, trade, migration, and investment across borders directly affects workers in both developed and developing countries. While most global trade and investment is between the developed countries, globalization has increased dramatically in a number of developing countries. Understanding the effects of globalization is critical for governments concerned about employment, working conditions, and, ultimately, poverty reduction. Broadly defined, working conditions include wages and other key job characteristics including (but not necessarily limited to) health and safety, hours, security, benefits, and representation. These conditions have direct and indirect effects on the risk of falling or staying in poverty. This note outlines an approach for a systematic cross-country comparison of the relationship between globalization and working conditions. In addition, the results from applying this approach to five countries (Cambodia, El Salvador, Honduras, Indonesia, and Madagascar) are presented. The country study results described in this note support the hypothesis that globalization has contributed to a shift of workers from sectors with low wage and poor non-wage working conditions (i.e., agriculture) to sectors with relatively higher wages and better non-wage working conditions.

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Globalization, Wages and the Quality of Jobs : Lessons for Policy Makers

2009-12, World Bank

This note summarizes the results and describes the policy implications of the recently published book globalization, wages, and the quality of jobs that evaluates some of the effects of trade and foreign investment on workers. This book contains a framework for analysis, a literature review, and five country studies that provide the foundation for three main lessons for policy makers that are described at the end of this note.

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Minimum Wages in Developing Countries : Helping or Hurting Workers?

2008-12, Terrell, Katherine, Almeida, Rita K.

This policy note reviews the literature on the effects of minimum wages on labor markets in developing countries. The authors begin by elucidating the challenges to ascertaining these effects, especially in developing economies where a large segment of the workforce is not covered by minimum wage legislation (uncovered sector). After summarizing the theoretical models and their predictions, the authors review the empirical evidence of the impact of minimum wage legislation on wages, employment, and unemployment in the covered and uncovered sectors of the labor market. The evidence strongly suggests that an increase in the minimum wage tends to have a positive wage effect and a small negative employment effect among workers covered by minimum wage legislation and that the effects tend to be stronger among low-wage workers. The findings are quite limited and fairly inconclusive on the indirect effects of increases in minimum wages on workers in the uncovered sectors, where the legislation either does not apply or is not complied with.

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If on-the-Job Trraining is So Important to Competitiveness, Why isn't There a Better Market for It

2007-09, Aterido, Reyes

There is no question that up-to-date job skills are critical to economic performance in today's rapidly changing and fiercely competitive global marketplace. Paradoxically, while the economic efficiency and innovation capacity offered by the upgrading of human capital is widely recognized, market forces have proven inadequate for stimulating and linking the demand and supply for this on-the-job training. In theory, employers, who seek a qualified workforce, would create a demand for training providers, who would compete with one another to offer relevant training. However, the demand for training suffers when there is lack of competitive pressure, low profitability, or market imperfections, which contribute to increased likelihood of mismatches between demand and supply. To remedy low levels of skills upgrading and market imperfections, partnerships between the public and private sectors in many industrial and developing countries alike have been formed to boost both competitiveness and employment. Yet these partnerships have often failed to adjust supply and demand of training. This note offers lessons from both the failures and successes of these partnerships in the interest of boosting economic growth through raising the training levels in the workplace.